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President Wilson and the Railways 


What has been Said by Various Persons, Organizations and 
Newspapers about the Transportation Problems Set Forth 
in the Message to Congress, Condensed and Arranged for 
Busy Citizens 


LIBRARY OF CONGRESS CARD AT8-2T07 


RAILWAY BUSINESS ASSOCIATION 


New York, Dec. n, 1918 




P RESIDENT WILSON’S pronouncement to Congress concerning rail¬ 
ways has brought a flood of editorials, statements and interviews 
from all parts of the country and from men in many occupations. 
This national interchange of present views has in a number of aspects 
forecast what the. public disposition is likely to be. It also has en¬ 
larged for thinking men their basis of reflection and discussion. The 

President urges Congress to expedite its quest for a solution, with the 

alternative that he may release the roads to their owners before the 

expiration of the 21 months prescribed for their return in the Control act. 

It has therefore seemed desirable to the Railway Business Associa¬ 
tion’s Committee on Railways After the War, under whose direction 
publications dealing with transportation have for some time been under 
analysis and classification, to present as promptly as possible to the rail¬ 
way supply industry and others concerned a digest of comments upon 
the President’s remarks, together with some pertinent material dated 
previous to the message. The Association offers no recommendations of 
its own at this time. 

This digest, which is the work of the Secretary of the Association, 
makes no attempt to embrace every relevant aspect of the problem, but 
deals especially with the phases which have been made prominent by 
the utterance of the President. 

In an endeavor to obviate the burden of searching a series of quota¬ 
tions for what bears on the phases particularly interesting to each 
reader, the material is grouped not by authors or by sources but by 
topics. 

We believe that this contribution will substantially serve the con¬ 
venience of business men and others necessarily overwhelmed with a miscel¬ 
laneous mass of statements and arguments, yet feeling the compulsion to form 
intelligent conclusions. 

W. W. SALMON, Chairman 

ALBA B. JOHNSON, President 
30 Church Street, New York 
Dec. 11, 1918 


r' 9.: 1 


& 


I* 
^3 




“Modified Private Control” 
or Government Ownership? 

Compiled by 


FRANK W. NOXON, Secretary 



AILWAYS, the President said to Congress on Dec. 2, may be (1) restored 
to their former status, (2) taken permanently by the government, or 
( 3 ) put under “modified private control.” 


A S among these possibilities com- 
ment almost universally assumes 
that the President himself as at pres¬ 
ent advised would prefer “modified 
private control/’ and Washington 
correspondents report that this is the 
preference of an unmistakable pre¬ 
ponderance in the present and next 
Congress. 

For the Next Congress 

CENATOR UNDERWOOD of Ala- 
^ bama, a member of the Joint Com¬ 
mittee on Interstate Commerce, pro¬ 
nounced it impossible for the present 
Congress to act because of lack of 
time, hence the President’s attitude 
“will result in throwing this prob¬ 
lem into the lap of the next Congress, 
which the Republicans control,” and 
“if the President does not call an 
extra session ... he will, under 
his language today, return the roads 
to their owners in lieu of Congres¬ 
sional action.” Senator Smith of 
South Carolina, Chairman of the 
Joint Committee, predicted that 
“Congress will immediately address 
itself to the task of drafting and pass¬ 
ing such legislation,” but the gener¬ 
ally accepted view was that the de¬ 
termination of policy would be the 
work of the next Congress. 

Present and Coming Chairmen 

npHROUGH the change in party 
* control Mr. Smith will be suc¬ 
ceeded after March 4 under the sen¬ 
iority rule by Senator Cummins of 
Iowa, who may thus be the leading 
figure in the legislative branch in the 
solution of the question. Mr. Cum¬ 
mins said: “Congress should go for¬ 


ward immediately with a painstaking, 
conscientious and exhaustive inquiry 
into the whole problem and pursue it 
with the utmost diligence until a con¬ 
clusion has been reached.” 

^ Senator Cummins for a number of 
years has let it be known that he was 
leaning toward government owner- 
ownership, but the war experience is 
said to have convinced him that gov¬ 
ernment operation would involve the 
danger of elections turning on rail¬ 
way wages. In a statement under 
his name in the New York Herald 
on the morning of Dec. 2, he said: 

“It should be constantly borne in 
mind that government or public own¬ 
ership with a guaranteed return on 
the capital does not necessarily imply 
government operation;” and he has 
been reported as nearly ready to in¬ 
troduce a bill for government owner¬ 
ship, with leases to private operating 
corporations. 

The next House Chairman of In¬ 
terstate and Foreign Commerce under 
the seniority rule will be Representa¬ 
tive Esch of Wisconsin, who is for 
“modified private control.” This is 
the view also of Mr. Smith, present 
Senate Chairlhan of Interstate Com¬ 
merce, while Mr. Sims of Tennessee, 
present House Chairman, long an ad¬ 
vocate of government ownership, in 
comment upon the message gives no 
indication that he has changed his 
mind. 

Other Senators 

OENAT0R NORRIS of Nebraska is 
^ reported to have a bill proposing a 
single corporation for government op¬ 
eration and control, the stock to be 


3 


offered to the public and the govern¬ 
ment to own what remains unsub¬ 
scribed. 

Senator Hoke Smith of Georgia was 
4 ‘especially pleased with the Presi¬ 
dent's indication of a purpose to en¬ 
courage the speedy return to the 
owners," and introduced a bill (ex¬ 
plained at another point in this di¬ 
gest) which has not, as some corre¬ 
spondents mistakenly assumed, any 
bearing on permanent government 
control. 

Other Senators approving “modi¬ 
fied private control" were Messrs. 
Kellogg of Minnesota, Watson of In¬ 
diana and Sherman of Illinois, the 
two latter being for “government 
control, with private ownership." 

Representative Gray of New Jer¬ 
sey has introduced a bill which 
would give existing railway com¬ 
panies the opportunity to take out 
federal charters under which direc¬ 
tors would include representatives 
of the government, the bondholders, 
the stockholders and the employees, 
all four elements to share in sur¬ 
plus earnings. The measure looks 
to a regional system of operation. 

Organized Labor 

Mr. Cooper of Ohio, a member of 
the House Committee, a former loco¬ 
motive engineer, is quoted as favor¬ 
ing “regulation." He says the era 
of high wages has made the labor 
unions strong for the government 
keeping the roads, but believes “this 
sentiment is not as strong as it was" 
.and looks “for it to recede consider¬ 
ably as a result of the President's 
message.'' (Numerous railway organi¬ 
zations before the President's message 
had memorialized Congress for per¬ 
manent government ownership.) . 

Judge Hughes and Mr. Bryan 

HARLES E. HUGHES in an ad- 
V 1 dress at Columbia University the 
week previous to the President’s mes¬ 
sage, said: “It is regrettable, but it 
it true, that governmental enterprises 
tend constantly to inefficiency . . . 
I do not mean to imply that the rec¬ 


ord of private enterprise is an agree¬ 
able one, but on a fair examination 
of conditions where governmental 
management has been maintained I 
believe that from the standpoint of 
efficiency the comparison favors pri¬ 
vate enterprises and that this country 
cannot afford to ignore the fact that 
inefficiency is the blight on our pub¬ 
lic undertakings." 

William J. Bryan has been advo¬ 
cating dual ownership—the Federal 
government to take the trunk lines 
and each state to take the local 
branches. 

Shippers 

OHIPPERS declared for return to 
^ private ownership in the largest 
gathering ever held by them in this 
country—the Reconstruction Congress 
of War Service Committees in Atlan¬ 
tic City Dec. 4-6. There was a regis¬ 
tered attendance said to reach 6,000. 
The Chairman of the Congress, Harry 
A. Wheeler of Chicago, President of 
the Chamber of Commerce of the 
United States, had said in his opening 
address on Dec. 4: “1 do not feel 
that we have as yet all the informa¬ 
tion needed to. enable this conference 
to offer more than the most super¬ 
ficial rcommendation in respect to fu¬ 
ture control and ownership of rail 
and ocean transportation." Resolu¬ 
tions, however, coming up from the 
‘ ‘ related group' ’ conferences through 
the “major group" conferences, to¬ 
gether with conversations among the 
delegates, led the “Clearance" (Res¬ 
olutions) Committee, headed by Jos¬ 
eph H. Defrees, former President of 
the Chicago Association of Commerce, 
to perceive that the Congress was 
nearly if not quite unanimous on the 
main question. The resolution which 
Mr. Defrees reported on the floor 
brought to his feet a Massachusetts 
delegate who urged that such action 
be omitted at that time. The delegates, 
about 4,000 present in the hall, list¬ 
ened impatiently to his speech and on 
a rising vote amid great enthusiasm 
of the affirmative, only four voted No. 


4 


The National Industrial Traffic 
League, composed of traffic directors 
of bureaus of city business bodies and 
traffic managers of individual indus¬ 
trial concerns, recently reiterated at 
Cincinnati its opposition to govern¬ 
ment ownership and authorized a com¬ 
mittee to draft legislative recommen¬ 
dations. 

The National Grange in convention 
at Syracuse, N. Y., Nov. 22 "unani¬ 
mously defeated a motion to support 
government ownership. ’ ’ 

Security Owners 

'T'HE National Association of Own- 
* ers of Railway Securities, of 
which the President is S. Davies War- 
field of Baltimore, with Samuel Un- 
termyer as general and Elihu Root 
as special counsel, has asked the Joint 
Committee of Congress for a hearing 
when it will advocate return of the 
properties to and permanent retention 
by their owners. Mr. Untermyer, in 
an address before the American Bank¬ 
ers Association at Chicago in Sep¬ 
tember, 1918, repeated his well-known 
advocacy of government ownership, 
but explains that he is consisted 
in his legal service of Mr. Warfield’s 
association because the immediate task 
is to restore the properties to their 
owners upon equitable terms and con¬ 
ditions. N. L. Amster of Boston, 
President of the National Railroad 
Security-Holders Protective Associa¬ 
tion (in a statement which is dealt 
with under its appropriate heading) 
declares for a certain form of private 
control. John B. Lunger, Vice-Pres¬ 
ident of the Equitable Life Assurance 
Society, on Dee. 6, before the Associa¬ 
tion of Life Insurance Presidents, re¬ 
ferred to a resolution favoring gov¬ 
ernment ownership recently intro¬ 
duced an the Senate by James Hamil¬ 
ton Lewis of Illinois as the "enter¬ 
ing wedge, which, if allowed to de¬ 
velop, can lead only to the complete 
overthrow of representative democ¬ 
racy. 9 ’ 

The Investment Bankers ’ Asso¬ 
ciation Dec. 9 approved a report 


submitted by a committee of which 
the Chairman was John E. Oldham 
of Merrill, Oldham & Co. of Boston, 
declaring the pre-war plan of rail¬ 
road regulation a demonstrated fail¬ 
ure and recommending elimination 
of conflict between state and federal 
bodies, repeal of federal and state 
anti-trust laws in their application 
to transportation, assumption by 
the government of responsibility for 
adequate earnings and credit. The 
resolution favored early return to 
permanent private ownership and 
operation. 

Financiers 

A LEADING Chicago financier, 
John J. Mitchell, President of the 
Illinois Trust Co., some days before 
the President’s message, held a con¬ 
versation which got into print as a 
declaration in favor of government 
ownership. After the message Mr. 
Mitchell exclaimed that he had merely 
spoken of government ownership as 
the less of possible evils and does not 
favor it. George M. Reynolds of the 
same city, President of the Continen¬ 
tal and Commercial National Bank, 
regarded "modified private control 
under governmental regulations as 
the best solution yet advanced. ’ ’ An¬ 
other Chicago banker, Ernest A. 
Hamill, President of the Corn Ex¬ 
change National, thinks "individual 
ownership and management is more 
efficient as well as more economical 
ultimately. ’ ’ 

Otto H. Kahn of Kuhn, Loeb & 
Co., in an address before the National 
Industrial Conference Board on Oct. 
10, favoring non-government owner¬ 
ship and operation, remarked that he 
knew "not a few large holders of 
railroad securities who from the 
standpoint of their selfish interests” 
believe "a reasonable guarantee or 
other fixed compensation by the gov¬ 
ernment would be preferable to the 
financial risks and uncertainties un¬ 
der private railroad operation in the 
new and untried era which we shall 
enter after the war.” The same 


5 


thought is made prominent by the 
New York Globe: “The railroad 
owners . . . are likely to think 

twice before seeking to get their prop¬ 
erty back. The costs of unrestricted 
competition, the new wage-scales and 
the difficulties of financing improve¬ 
ments make a resumption of the old 
status almost impossible. The gen¬ 
eral public is not greatly enamored 
of public operation, but if the rail¬ 
road owners join radical elements in 
favor of public ownership some 
scheme based on it may be counted 
upon as almost certain of success.” 

Mr. Kahn’s partner, Paul M. War¬ 
burg, former member of the Federal 
Reserve Board, warned the Recon¬ 
struction Congress of War Service 
Committees of the danger which “we 
are facing at the moment of our 
proudest triumph. It must be our 
serious concern that a national effort, 
born in idealism, shall not bear the 
seeds of national decline.” Recon¬ 
struction legislation, he declared, 
must be of a kind which will provide 
safety for our future political life and 
cited as an example laws “which will 
be to the railroads what the Federal 
Reserve act is to the banks. ’ ’ 

Railway Executives 

T’ HE Railway Executives’ Advis- 
* ory Committee, the organization 
which under the chairmanship of 
Frank Trumbull suggested the crea¬ 
tion of the Joint Committee of Con¬ 
gress on Interstate Commerce; which 
laid before that Committee plans for 
correction of defects in railroad reg¬ 
ulation; and which since the passage 
of the Control act has devoted itself 
to negotiations of the standard con¬ 
tract for guaranteed return during 
control, now under the chairmanship 
of T. DeWitt Cuyler of Philadelphia 
has resolved that “private initiative, 
enterprise and responsibility in the 
creation, extension, improvement and 
operation of American railways 
should, as a matter of national policy, 
be fostered and preserved and that 
government ownership and operation 


of these facilities is not conducive to 
the highest economic efficiency of the 
country. ” At a largely attended 
meeting of corporate executives and 
counsel this expression was adopted 
with but one dissenting vote, that of 
Newman Erb, President of the Ann 
Arbor Co., who said that unless the 
roads were returned under better con¬ 
ditions than prevailed when they 
were taken over he would prefer to 
sell to the government, 

E. P. Ripley, former President of 
the Sante Fe, dean of railway corpo¬ 
ration executives, who has so often 
predicted government ownership that 
many have understood him to favor 
it, now makes the contrary emphatic 
in an article (to which further ref¬ 
erence will be made herein) and in 
an interview on the message where he 
says: “My objections to government 
ownership are not made from the 
standpoint of stockholders but from 
the standpoint of citizens. I think it 
will mean the beginning of the end 
of our Republic. It is utterly im¬ 
possible in a country like ours to 
manage railroads without politics, and 
politics will certainly kill service.” 

Julius Kruttschnitt, Chairman of 
the Southern Pacific, assuming that 
the roads are to be returned to their 
owners, discusses in a statement 
quoted elsewhere in this digest the 
conditions which he considers desir¬ 
able. 

Samuel Rea, President of the Penn¬ 
sylvania, has indicated his faith in 
non-government ownership and opera¬ 
tion, but hoping the properties will 
not be returned until conditions can 
be rectified. 

Samuel 0. Dunn, author of “Gov¬ 
ernment Ownership of Railroads,” 
which sets forth experience abroad 
and pronounces state railway^ much 
inferior to non-state, is in Europe, 
where as editor of the Railway Age 
he is one of the journalists enjoying 
the hospitality of the British govern¬ 
ment ; but in conversation just before 
sailing Mr. Dunn reiterated not only 
his own conviction, but also his knowl- 


6 


edge of conviction generally among 
railway corporation and United 
States Railroad Administration offi¬ 
cials favorable to a non-government 
transportation system. 

Editors for Government Roads 

npHE New York American predicts 
A that the roads will not be re¬ 
turned to private hands, and asserts 
that “every great civilized nation in 
the world owns and operates its rail¬ 
roads except the United States;” that 
private ownership “is a story of rail¬ 
road wrecking and the sinking of the 
hdpes of honest men and women who 
put the savings of a life time in the 
railroad securities; that it would 
mean a return to government by in¬ 
junction, to strikes and lockouts. ’ ’ 
“On account of the war,” says the 
Superior (Wis.) Telegram, “the gov¬ 
ernment took over railway operation 
temporarily and soon found that 
rates would have to be boosted to 
prevent a heavy deficit, therefore rates 
were increased and nobody com¬ 
plained. The reason was that it was 
the act of the government . . . 

In view of this attitude of the public 
mind the belief is growing that na¬ 
tional ownership and operation works 
more satisfactorily than corporate 
ownership.” 

Editors for Postponement 

P ostponement of the mam 

question is urged by the New York 
Journal of Commerce, which thinks 
that the new Congress should return 
the roads with some immediate cor¬ 
rection of defects in regulation, and 
leave for more deliberate considera¬ 
tion all proposals for “destruction of 
the system or the creation of a new 
one. ’ ’ 

Says the New York Tribune: 
“There has been no real test under 
war conditions. The vital test will 
not fairly begin before the opening of 
the new year. It is to be hoped that 
a far-sighted and energetic successor 
to Director McAdoo can be found in 
order that this test may be convinc¬ 
ing/’ 


Editors Predict Private Control 

nr HE Times of Scranton, Pa., ob- 
serves that the ranks of those who 
advocate government ownership 
“have been increased lately,” but 
asks: “Can it be said that there is a 
great, nation-wide demand for it, 
however? If there is, its voice does 
not appear very strong as yet.” 

The Paterson (N. J.) Morning 
Call doubts that the owners would 
welcome going back to the pre-war 
status and believes railway employees 
will favor federal control or even 
ownership but finds “a sentiment in 
this country which is against public 
ownership.” 

“Middle ground,” thinks the Bos¬ 
ton Post, “between the experiment of 
government ownership and the known 
poor results of the pre-war conditions 
undoubtedly offers the best possibili¬ 
ties for general satisfaction, and ap¬ 
pears to be heartily approved by all 
concerned.” “The President’s third 
alternative, accompanied by develop¬ 
ment of waterways and highways as 
parts of the general system of trans¬ 
portation seems” to the Portland Ore¬ 
gonian “to combine the most advan¬ 
tages with the fewest disadvantages. ’ ’ 

Competition 

D ETENTION of competition is ad- 
vocated by the San Francisco 
Chronicle. “The crucial question— 
aside from the control of great voting 
power—is what shippers and travelers 
lose by withdrawal of facilities and 
accommodating spirit which results 
from competition.” 

Government Operation Inefficient 

vr OTHINGr, says the Bridgeport 
^ (Conn.) Post, could be much 
worse than a continuance of federal 
direction as it is, "because, first, of 
“the possibilitj r of political manipu¬ 
lation, wth wages as the lever, by the 
party in power,” and, second, “the 
tremendous advance in cost and the 
wretched and unsatisfactory service 
which in a short time would approach 
what we now have in other public 


mil departments ... To return 
to conditions existing . . . before 

the war means a return to the ham¬ 
pering acts of 49 commissions, the 
laws and rules of which have been 
coldly swept aside by the federal gov¬ 
ernment, and action has been taken 
which the best railroad men advised 
long ago, but which the demagogues 
roared about for many decades. ” 
Remarks the New York Commer¬ 
cial: “Governments have never been 
as efficient as private corporations in 
handling any kind of business. In 
England the telephone service is 
wretched and is not patronized by the 
public as it is in America. When the 
war came to us our government ar¬ 
senals and big gun shops were of 
little value. Some should be main¬ 
tained for experimental purposes but 
in an emergency we shall always have 
to rely on private enterprise to fur¬ 
nish war materials. . . . It is 

reassuring to find that the President 
recognizes Ihe value of private initia¬ 
tive and enterprise.” In another 
article the same newspaper prophesies 
that under government ownership 
“the higher places would become re¬ 
wards for political service instead of 
being the goals which faithful em¬ 
ployees might hope to win 
How many postal clerks or mail car¬ 
riers have been rewarded with post¬ 
masterships ? ’ ’ 

Political Bangers 

HP HE Boston Herald thinks that 
“the idea of laying down new 
railroads on the same theory that we 
have made river and harbor expendi¬ 
tures ; of building railroad stations as 
we have our federal post offices; of 
employing trained men as we do our' 
political appointees in Washington 
and elsewhere, could not fail to spell 
wide-spread disaster. ’ ’ 

Still further goes the New Bedford 
(Mass.) Mercury: “The peril lies in 
the tendency which is manifest on 
all sides to socialize all sorts of pub¬ 
lic activities. Massachusetts is full of 
such ideas. This city has been asked 


to undertake the distribution of fuel, 
a far more radical thing than the 
production which the government un¬ 
dertook as a war necessity. Such 
measures will lead to mischief and 
revolution, the effects of which the 
average man does not foresee. It 
would lead to the annihilation of our 
economic system, the institutions and 
ideals upon which the nation was 
founded, destroy individual oppor¬ 
tunity and personal liberty, ruin in¬ 
vestment, and wipe out the savings of 
the thrifty who have put aside their 
earnings in investments, life insur¬ 
ance policies and banks.” And the 
Flint (Mich.) Daily Journal asserts: 
“Paternalism carried to extremes 
if the administration permitted it to 
be persisted in would be extremely 
bad for the country at this time when 
there are problems in abundance to 
be solved of necessity.” 

Present Control Criticized 

lV/f ANY editors base their opposition 

to government ownership on 
what they regard as shortcomings of 
the government control regime. Thus 
the Cincinnati Enquirer declares that 
‘ ‘ government control has demon¬ 
strated the weaknesses that now ob¬ 
tain and that will be accentuated un¬ 
der government ownership.” Two 
Pittsburgh journals concur in that 
view. Says the Leader: “Objection 
to unsatisfactory governmental opera¬ 
tion of the transportation system is 
not a secret. It has been expressed by 
the individual traveler quite as ex¬ 
tensively as by the shipper. Higher 
costs to the public have been the 
rule.” And the Dispatch: “There 
is far from a unanimous verdict that 
government ownership has been an 
improvement from a public as dis¬ 
tinct from a military viewpoint. 
Shippers and passengers are being 
heard from.” The New York Sun 
says that if the government “cannot 
do immensely better in the next two 
years than it has in the last year 
. it ought to be an easy thing 
for the American people to decide in 


1920 that the railways shall be both 
owned and operated by private cap' 
ital, enterprise, energy and brains.” 

“We have had,” says the Philadel¬ 
phia Press, “some experiences of full 
government management and want no 
more of it at least in time of peace. 

. Railroads, like individuals, 
should have a check on inevitable evil 
tendencies but within the line of safe¬ 
ty they should be given as advantag¬ 
eous a liberty as experience has 
shown to be compatible with the pub¬ 
lic good.” 

An Auspicious Record 

nr HE Keokuk (la.) Gate City re- 
* marks: ‘ ‘ Some advantages of cen¬ 
tralized authority are obvious now 
and it is not unreasonable to believe 
that others will be apparent long be¬ 
fore the roads go back to their own¬ 
ers. All can be had under private op¬ 
eration if the government will permit 

For a New Policy 


the railroads to administer their own 
affairs along lines approved by rail¬ 
road men of the highest ability and 
character. ’ ’ 

“There must,” declares the Buf¬ 
falo Evening News, “be a return to 
the old system of Yankee hustle and 
competition. It gave America the 
finest railroad service in the world at 
reasonable cost. It will do it again. ’ ’ 

The Weeklies 

/"YF the weekly journals, judged by 
^ recent utterances, the Independ¬ 
ent is for government ownership of 
public utilities, including railroads; 
the Outlook, for government owner¬ 
ship of telephones and telegraphs, but 
for the President’s third alternative 
with railroads; while aggressively op¬ 
posed to government ownership are 
Leslie’s, Collier’s and the Saturday 
Evening Post. 

of Encouragement 


£ £ QiOME new element of policy,” the President said, “is absolutely neces- 
Aj sary” in order to correct , before releasing the roads to their owners, 
<( the old conditions,” ivhich are “ conditions of restraint without de¬ 
velopment, with nothing affirmative or helpful about them. What the coun¬ 
try chiefly needs is that all its means of transportation should be developed.” 


A POLICY that would foster as 
well as correct and restrict was 
urged upon the President in 1915, 
with the result that he recom¬ 
mended a “fresh assessment of cir¬ 
cumstance” through a Congres¬ 
sional inquiry. The resulting Joint 
Committee, headed by Senator 
Newlands of Nevada, until his 
death, and since by Senator Smith 
of South Carolina, largely devoted 
its hearings in 1916 ' and 1917 to 
proposals directly or indirectly 
bearing on the need of assuring 
railway earnings sufficient for ade¬ 
quate operations and credit. In 
those hearings a constant and well 
defined part was taken by Senator 
Cummins, who, as already noted, 
will succeed Mr. Smith as Chair¬ 
man of the Senate Committee on 


Interstate Commerce and hence of 
the Joint Committee. 

“Rich and Poor Road” 

A S viewed by Mr. Cummins the 
chief obstacle was the problem 
of “the rich and poor road”: 
Where two roads between common 
points take the same rates how 
can the revenue of the poor road 
be made sufficient for adequate 
service to the people dependent 
upon it without unduly enriching 
the road which is already prosper¬ 
ous and giving satisfactory serv¬ 
ice? In substance this question he 
put to one witness after another. 
On Dec. 2 in concurring with the 
President that the roads ought not 
to be returned to their owners 


9 


under the former system, Senator 
Cummins said: ‘‘The defects of 
that system are obvious and 
fundamental and failure of Con¬ 
gress to substitute some other plan 
before the 21 months expire will 
be inexcusable.” 

The present Senate Chairman, 
Mr. Smith of South Carolina, on 
the same day urged that some 
provision must be made by which 
new roads built through un¬ 
developed country can exist until 
revenue pays “a reasonable per¬ 
centage of the capital and labor 
invested in their establishment.” 

No Statutory Policy 

oINGLING out the “new element 
of policy” affecting revenue as 
the subject of an editorial, the Wall 
Street Journal of New York says: 

“Congress has never declared the 
nation’s policy toward the common 
carriers nor has it ever authorized 
the Interstate Commerce Commis¬ 
sion to do so. The most that the 
law-makers ever said, with the help 
of the courts, is that rates. . . . 
must be reasonable.” The Com¬ 
mission has said in effect “that 
it had no power to adjust rates in 
such a manner as to frame a na¬ 
tional policy for the encouragement 
of railroad construction. That was 
outside its province. It could 
practise restriction; it held itself 
powerless to open the door to 
development. . . . Federal and 

state regulatory bodies have long 
had ample authority to restrict the 
actions of the carriers, but they 
have never been charged with that 
responsibility for results which can¬ 
not safely be separated from author¬ 
ity. It is just at this point that 
the railroad policy of the future 
must depart from that of the past.” 

In the same vein we read in 
the Providence Journal: “When 
the time comes for returning the 
railroads to their owners Congress 
will be called upon to repeal laws 
that have been unduly restrictive 


in the past and also to put an end 
to the old policy of fixing rates 
that are not based upon legitimate 
expenses. Mr. McAdoo at once 
repudiated the procedure of the 
bureaucratic Interstate Commerce 
Commission by advancing rates 
from 25 to 40 per cent and ship¬ 
pers were not put out of business 
when required to pay fair prices 
for transportation instead of get¬ 
ting it at less than cost.” 

Likewise the Schenectady (N. Y.) 
Gazette: “The railroads must be 
built up to give the service the 
country needs and at the same 
time there must be a safeguarding 
of interest that will command the 
confidence of large and small in¬ 
vestors”; and according to the New 
York Sun the legislative and ad¬ 
ministrative government “while 
still exercising a proper and useful 
control, must not force the roads 
to starve.” 

Report of Commission 

'Tp'HE annual report of the Inter- 

state Commerce Commission ap 
peared a few days following the 
President’s message. The Commis¬ 
sion indicates the aspects which it 
now thinks must be dealt with. 
Among them is this: “Limitation 
of railway construction to the 
necessities and convenience of the 
government and the public, and as¬ 
suring construction to the point of 
these limitations. ’ ’ 

The report of the Commission 
contains no reference to the pro¬ 
posal so often made that the statute 
should place upon some federal 
functionary the duty of promoting 
provision of traffic facilities to meet 
traffic growth and the authority to 
fix rates sufficient to yield the 
revenue required. 

To Restore Rate Suspension 

oENATOR HOKE SMITH of 
^ Georgia deals with the method 
of rate regulation in a bill intro¬ 
duced Dec. 3. This would amend 


10 


the Control Act so as to revive 
during the period of government 
operation the power of the Inter¬ 
state Commerce Commission to sus¬ 
pend rate advances pending investi¬ 
gation, such advances being pro¬ 
posed on the President’s (Director 
General’s) initiative. Such a pro¬ 
posal aims at the situation created 
by the Control Act, which in effect 
gives initiative in rate making, 
without suspension, to the railway 
manager, namely, the Director Gen¬ 
eral—a power which was taken 
from the railway managers in 1912. 

According to the letter of the 
Control Act, the Interstate Com¬ 
merce Commission may review any 
“President-made” rate after it has 
gone into effect, but only one 
“President-made” rate has been 
set aside by the Commission. This 
was in a Pacific coast lumber case 
pending before government control, 
where the issue was alleged dis¬ 
crimination against a region. Be¬ 
fore the case was decided the 
Director General put in a schedule 
which raised both the rates whose 
relation was in litigation. The 
Commission in deciding that the 
relation was discriminatory and 
must be corrected was ordering the 
Director General literally to change 
one of his own rates. This brought 


the comment in some quarters that 
the Commission had “asserted it¬ 
self” against the Director General’s 
authority. Mr. McAdoo did, and 
in public said, nothing about it. 
All he had to do to maintain 
revenue was to correct the dis¬ 
crimination by raising one rate in¬ 
stead of depressing the other; the 
Commission had not and has not 
in any case undertaken as ex¬ 
plicitly affecting revenue to exer¬ 
cise its power under the Control 
Act to review the Director Gen¬ 
eral’s rates. 

So under government control in 
practice, though not necessarily 
under the terms of the act, the 
officer who is charged with re¬ 
sponsibility for adequacy of facili¬ 
ties and service exercises, without 
supervision, investigation or review 
(except for abatement of discrimin¬ 
ations), the function of adapting 
rates to revenue requirements; 
while the Interstate Commerce 
Commission performs the work 
of removing discriminations. It is 
this war-time situation • which 
Senator Hoke Smith would change 
by restoring the pre-war practice, 
and he is known to have in this 
the support of many industrial 
traffic managers and shippers’ 
counsel. 


Plans For Regional Monopolies 


A 


8 an example of possibly desirable unification the President cited 
“ regional corporations , under which the railways of definable areas 
would be in effect combined in single systems.” 


\/f UCH thought and utterance 
of economists, railway and 
financial specialists has been ex¬ 
pended in the attempt at framing 
an answer to Senator Cummins’s 
question about the “rich and poor 
road.” The Senator at various 
stages of the Joint Committee 
hearings asked witnesses how the 
strong line could be made to ab¬ 
sorb a “connecting” weak line and 


whether regional monopolies were 
feasible. The Senator is quoted as 
having said in conversation that he 
never got an answer on the stand. 
Some of the correspondents attri¬ 
bute to the rumored Cummins bill, 
not yet published, acceptance of 
regional railway monopolies; but 
various persons* who have talked 
with the Senator have understood 
him to prefer some method of 


11 


merging weak with strong roads 
which would preserve competition 
in every region; and they quote 
him as earnestly desirous of keep¬ 
ing his present ideas tentative until 
he can obtain the views of com¬ 
petent specialists in the several 
fields by which to test his own. 

Various Regional Schemes 

T) EGIONAL monopoly plans are 
based upon the idea that sur¬ 
plus income of those roads which 
have any could be spread over all 
the roads serving an area. The 
weak lines would be merged with 
the strong. 

Five “regions” figure in the 
plan which for about ten years has 
been advocated by W. W. Cook, 
General Counsel of the Mackay 
Companies. Mr. Cook in 1917 filed 
with the Joint Committee of Con¬ 
gress a bill setting forth his 
scheme. 

Samuel 0. Dunn, editor of the 
Railway Age, outlined in Collier’s 
Weekly for Mar. 9, 1918, a re¬ 
gional plan dividing the country 
into not less than five nor more 
than ten districts. 

F. J. Lisman, a New York in¬ 
vestment banker, proposes from 
eight to fifteen regional corpora¬ 
tions, the government “to en¬ 
courage the consolidation of com¬ 
panies within each region and if 
necessary to enforce consolidation.” 

Another New York investment 
banker, John R. Hall of Hallgarten 
and Co., proposes one unified sys¬ 
tem of railroads merged and or¬ 
ganized under a federal charter 
and operated by means of a central 
controlling body with regional 
direction and supervision. 

These plans appeared in the in¬ 
vestment section of the Railway 
Age, which on Nov. 15 published 
comment upon these schemes by 
E. P. Ripley of the Santa Fe. Mr. 
Ripley is inclined to favor a num¬ 
ber of regional roads, which might 
limit to something like 10,000 or 


12,000 miles the length of line to 
be managed by any one man. 

Francis H. Sisson, Vice-President 
of the Guaranty Trust Co. of New 
York, sees but one alternative to 
a return to the old conditions or 
government ownership, namely, 
11 regional railways under private 
ownership” and delimited on 
“natural traffic divisions.” 

N. L. Amster of Boston, Chair¬ 
man of the Executive Committee 
of the Rock Island and President 
of the National Railroad Security 
Holders Association, would have 
a central corporation composed of 
representatives of the government, 
of the shippers, of the employees 
and of the security holders. This 
corporation could “assimilate the 
railroads. ’ ’ 

Newman Erb, President of the 
Ann Arbor, proposes a central cor¬ 
poration owned by regional cor¬ 
porations. 

Mobilization of Credit 

A S bearing on Messrs. Hall, Erb 

and Amster’s thought of ulti¬ 
mate central and single ownership, 
the possibilities of spreading sur¬ 
plus income over all the roads is 
indicated not by regions but na¬ 
tionally by a distinguished rail¬ 
way corporation official, who asks 
that his name be not given at 
present. His plan “for mobiliza¬ 
tion of the credit ’ ’ of the roads, 
bears date of November, 1917. For 
that calendar year the net income 
available for interest, he remarks, 

was say .$950,000,000 

Requirements for inter¬ 
est on debt say. 420,000,000 

Remainder .$530,000,000 

Any banker or financier, he thinks, 
would say, “This is, as a whole, 
a solvent situation.” Yet every 
railroad in the country, he pointed 
out, was at that moment appre¬ 
hensive about the future and many 
in actual distress. Why not, he 
asked, mobilize credit as facili- 


12 






ties had been mobilized by the 
Railroads’ War Board or as bank¬ 
ing reserves were mobilized by the 
Act of 1913? 

The author of this plan, how¬ 
ever, proposes not national unity 
of ownership but regional. He 
suggests five districts,—New Eng¬ 
land, Eastern, Southeastern, North¬ 
western, Southwestern. Computing, 
for illustration, the financial situ¬ 
ation of the five regions as if 
they were a single system, this 
economist figures that allowing the 
highest stock prices quoted dur¬ 
ing the three-year period ended 
Dec. 31, 1916, new stock issued in 
exchange for old would aggregate 
say $6,500,000,000 upon which divi¬ 
dends at 5 per cent would require 
$325,000,000, “leaving $205,000,000, 
half to go to shareholders or to a 
reserve fund, the other half to be 
used for extension of facilities.” 

Against the Regional Plan 

✓"\PPOSITION to the regional 
^ plan was expressed by Julius 
Kruttschnitt, for many years the 
leading lieutenant of the late E. 
H. Harriman on the side of opera¬ 
tion, and now Chairman and cor¬ 
porate President of the Southern 
Pacific. Mr. Kruttschnitt says: 

“My objection to the regional 
plan as I understand it is that it 
would start with a forced alienation 
of the properties at what would no 
doubt be a sacrifice of values, and 
would result in a practical de¬ 
struction of all competition. For 
what purpose? Apparently for the 
purpose of securing the benefits 
of unified control and the efficiency 
of federal operation. Is it not 
well to ask whether the price to 
be paid for these benefits is not 
too high and whether they cannot 
be secured at a lower price? 

“There is no reason whatever, 
as has been proven by past experi¬ 
ence, why with a modification of 
the federal control which existed 
in the past, the public cannot 


secure the. unquestioned benefits of 
private initiative and of efficiency 
equally as great as, or greater than, 
that shown by the Federal Rail¬ 
road Administration. The latter 
has made more intensive use of all 
the methods the railroads origin¬ 
ated in the way of securing greater 
carloading and greater train¬ 
loading, rendered possible by the 
exercise of powers which had al¬ 
ways been denied through private 
control. These benefits can be 
provided under private control 
with such governmental regulation 
as will make the results possible. 

“Railroad officers generally be¬ 
lieve that the absolute suppression 
of competition contemplated by the 
regional plan, as well as by govern¬ 
ment ownership, would result in 
stagnation, and that there would be 
no stimulus for the roads under 
such a plan to strive continually 
to better their service; whereas 
under competition regulated by the 
government, all of the benefits aris¬ 
ing from the desire of private own¬ 
ers to increase the traffic and 
earnings of their roads would 
follow.” 

Mr. Kruttschnitt referring to the 
President’s statement that the roads 
had been “unequal to their tasks,” 
continued: “In handling the 

traffic which the Federal Railroad 
Administration has handled during 
the present year and which it is 
claimed is the largest ever handled 
in the historv of the country, the 
railroad plants—including locomo¬ 
tive, cars, main line and terminals 
—were substantially those provided 
for under private control. ... If 
the railroads, starved as they were 
under regulation as it existed prior 
to federal control, could meet the 
demands made by developing in¬ 
dustry as well as they have done, 
what might they not have accom¬ 
plished under intelligent and con¬ 
structive control which it is hoped 
Congress will now provide?” 


13 


Inter-Subsidiary Rivalry 

/^> ONTAINED in the anonymous 
^ draft quoted above is this 
reply to misgivings lest a regional 
organization occasion loss of 
rivalry and of striving for excel¬ 
lence : 

‘ ‘ Operating management would 
be continued m a spirit of rivalry 
but under general direction, divi¬ 
ding lines of a region for ^actual 
operation in the most rational way. 
This would permit comparisons of 
one line with another as to train¬ 
load, operating costs, etc.” As 
illustration the author cites the 
subsidiaries of the Steel Corpora¬ 
tion. 

Another reply is suggested by E. 
P. Ripley: “a healthy rivalry as to 
the accommodations and facilities 
offered the public, even though in 
an entirely different part of the 
country, so that the customs pre¬ 
vailing in New England, for ex¬ 
ample, may be compared with those 
of the Middle West or Pacific 
states. Competition of this kind 
alone would have its influence, but 
there would be direct competition 
in many cases which would have 
its effect also.” 

Decentralization and Mechanical 
Progress 

\T ALUE of preserving many in- 
* dependent operating units was 
pointed out to the Director General 
by the Railway Business Associa¬ 
tion in February, 1918, from the 
point of view of “reasonable ex¬ 
pedition in the demonstration and 
introduction of improvements.” In 
that communication it was stated: 
“Manufacturers of railway goods 
have borne an honorable part in 
promoting the progress of trans¬ 
portation science. What they have 
achieved for the public in safety, 
comfort, speed and economy of 
railway operation has been accom¬ 
plished in an atmosphere of keenest 
competition. We could try per¬ 


suasion upon one independent rail¬ 
way manager after another until 
the test was made and a demon¬ 
stration afforded. Our work has 
been marked by variety, elasticity, 
development. The inventor, the 
executive and the salesman have 
been inspired by the hope of ex¬ 
celling, roused to efforts by the 
exertions of rivals. Under such 
conditions our industries and the 
country with them have progressed 
and thriven. ... We believe that 
the preservation of decentralization 
in our dealing is not only important 
for the immediate present but vital 
as a precedent for an ultimate ad¬ 
justment after the war.” 

Partial Consolidation 

tT is known that a number of 
* influential men who are not yet 
ready to publish plans are studying 
the “rich and poor road” problem 
along the line not of regional 
monopolies at the one extreme or 
mergers of connecting and non¬ 
competing lines at the other, but 
of mergers within an area or be¬ 
tween termini such that a number 
of lines would be consolidated not 
all into one but by pairs, one weak 
road with one strong road, preserv¬ 
ing competition. 

Others say that consolidation has 
already proceeded far enough. 
They would like to keep all the 
present operating units independ¬ 
ent, rehabilitating the . weak lines 
either through rate advances or re¬ 
organizations, according to the de¬ 
gree of their financial feebleness. 

Government Guarantees 

aTRENGTHENING of railway 
^ credit is not hoped for by all 
the debaters merely from “mobi¬ 
lization. ’’ Government guarantee 
\of stock dividends is a part of Mr. 
Cook’s plan, Mr. Dunn’s, Mr. 
Sisson’s, Mr. Ripley’s, and of the 
' anonymous plan quoted above. Mr. 
Cook’s proposed regional companies 


34 


“could obtain the money” (for ac¬ 
quiring stock control) '‘by the 
issue of their own stock, with from 
3 to 5 per cent dividends, guaran¬ 
teed by the government, with a 
possible extra per cent if earned, 
all over 6 per cent to go to the 
government.” Mr. Dunn would 
guarantee stockholders a minimum 
return of say 5 per cent or require 
the Interstate Commerce Commis¬ 
sion so to fix rates that they would 
yield a specified minimum return. 
The anonymous plan has the gov¬ 
ernment guarantee of 5 per cent on 
the stock of regional corporations. 

Objections to maximum as well 
as minimum limits on stockholders’ 
returns were set forth in 1916 by 
George A. Post, then President of 
the Railway Business Association, 
now Chairman of the Railroad 
Committee of the Chamber of Com¬ 
merce of the United States. 
Speaking before the New York 
State Bankers Association, Mr. 
Post said: 

“Some would limit profits, but 
guarantee a minimum dividend by 
the government to subscribers to 
stock, the government to take all 
above the maximum dividend al¬ 
lowed. The guaranteed minimum 
has been suggested as 3 per cent 
and the maximum 6 per cent. Such 
theories are repugnant to what I 
conceive America to be. My soul 
revolts at the thought that this 
country, the land of opportunity, 
the land of great risks and great 
rewards, shall say to investors, in¬ 
ventors, executives, and the rank 
and file of workers in the railway 
realm: ‘We insure you against 
failure, but we estop you against 
great success! . . . How shall we 
spur on the naturally lazy and 
shiftless or curb the reckless if 
they are sure of being 3 per centers 
without determined effort or the 
exercise of prudence? How shall 
we keep blazing the fires of ambi¬ 
tion in eager souls if naught of 


brilliance, indefatigable energy, 
thrift, and self-denial can overleap 
the hurdle of a beggarly 6 per 
cent return for the best that there 
is in them? 

“How can capital be lured from 
its hiding places in vaults to build 
railroads and factories, tunnel the 
mountains or develop mines, if the, 
possible rewards are not commen¬ 
surate with the risks? How can we 
raise industral giants and incul¬ 
cate intrepidity of commercial spirit 
on a 6 per cent diet?” 

Adequate Transportation Rates 

OR do all the sponsors of uni- 
^ fied and regional corporations 
rely upon guarantees. 

Mr. Lisman declares that “the 
act must provide that the rates in 
all cases be high enough to enable 
the companies to earn interest on 
their outstanding debt, as well as a 
fair rate of interest, say 6 per cent, 
on the outstanding capital stock.” 

Mr. Hall thinks “the adjustment 
of rate questions should be made 
as free from governmental inter¬ 
ference as is consistent with the 
necessity of reserving to a regula¬ 
tory body the power to handle ef¬ 
fectively exceptional needs for rate 
adjustments.” Stock of the “cen¬ 
tral” corporation in Mr. Hall’s 
scheme “should be issued in an 
amount which would permit the 
conservative distribution of regular 
dividends at a rate sufficient to 
attract capital under most condi¬ 
tions when funds are needed for 
development. ’ ’ 

Mr. Amster would have securi¬ 
ties “limited to a certain fixed in¬ 
come,” the rate to be “not less than 
4 per cent per annum, with a 
graduated scale for increased busi¬ 
ness and profit. If the earning 
power of this federal corporation 
should prove insufficient to pay 
operating expenses and the fixed 
income on securities under the 
present freight and passenger rates, 


15 


then the trustees who would man¬ 
age this federal railroad corpora¬ 
tion, composed of representatives of 
the government, the shippers, the 
employees and the security holders, 
would find no difficulty in estab¬ 
lishing charges such as would en¬ 
able the railroads to operate and 
meet expenses and pay the fixed 
income on the securities.’ ’ 

Government in the Management 

ONTROL of management under 
supposedly non-government 
operation presents one of the least 
discussed of all phases. 

Senator Cummins in his New 
York Herald statement of Dec. 2 
said that ‘'government ownership 
with a guaranteed return upon the 
capital does not necessarily imply 
government operation. ” He has 
not disclosed in public whether he 
is considering a guarantee of divi¬ 
dends to stockholders in the lessee 
operating corporations or whether 
he would give the government 
representation on the boards of 
operating companies. Most of the 
single-unit and regional-unit 
schemes specify government direc¬ 
tors or involve a guarantee of divi¬ 
dends which has been assumed to 
entail government directors. 

Various authorities have raised, 
first, the question whether a guar¬ 
antee would ever get popular and 
Congressional sanction if it did nci 


carry with it control of the board; 
second, the question whether an 
owner, creditor or guarantor would 
long refrain from exerting an in¬ 
fluence upon selection of managers 
and framing of policies. 

The Interstate Commerce Com¬ 
mission in its 1918 annual report 
mentions as a desirable feature of 
modified private control the 
“emancipation of railway operation 
from financial control.’’ The prob¬ 
lem of which a solution has been 
asked from advocates of govern¬ 
ment ownership, government loans 
or government guarantees is the 
preservation of operation from 
political control. 

The answers thus far given may 
be summed up in the suggestion that 
if the government were to acquire 
an anxiety about sufficiency of 
railway revenue for operations and 
credit the government could 
stabilize the situation quite as well 
by putting the cost upon users in 
the form of rates * and upon 
economies in the form of less rigid 
insistance upon wasteful competi¬ 
tion as by putting it upon the tax 
levy to meet losses under govern¬ 
ment ownership or deficits under 
government guarantee. It is alleged 
that there would be an added ad¬ 
vantage in leaving management 
completely responsible in its sphere 
and regulation completely respon¬ 
sible in its. 


Wider Scope for Federal Regulation 


^ ^ 71/fULTIFORM regulation by both state and federal authorities” was 
IVJL mentioned by the President as an outstanding aspect of “the old 
conditions” ivhich must be modified. 


VERY one of the regional plans 
^ set forth in the foregoing con¬ 
templates federal charters. 

The resolution of the Reconstruc¬ 
tion Congress of War Service 
Committees urges early return of 


the roads to their owners “under 
federal charters.” 

This was the proposal of the 
Railway Executives Advisory Com¬ 
mittee before the Joint Committee 
of Congress. The aim was to 


16 


unify exclusively in federal hands 
the regulation of security issues, 
and to avoid dispute over validity 
where federal and state restrictions 
conflicted by abandoning state 
charters. 

Federal incorporation was op¬ 
posed by the National Association 
of Railway and Utility Commission¬ 
ers through Max Thelan, President 
of the California Commission, who 
argued that it would lead to the 
complete displacement of all state 
control over railways even in the 
sphere of local “police” regula¬ 
tion. 

Mr. Sims of Tennessee, House 
Chairman of Interstate and Foreign 
Commerce, made this comment on 
the President’s message: “I am 
satisfied that Congress will never 
accede to the proposal to wipe out 
local regulation by means of fed¬ 
eral incorporation. . . . Regula¬ 
tion from one place, I believe, will 
not be tolerated. There are local 
questions which must be handled 
by local bodies.” 

Federal Rate Jurisdiction 
ENLARGEMENT of the federal 
scope in regulating so-called 
‘ ‘ state rates ’’ is the proposal to which 
the state railway commissioners most 
object. 

The courts have sustained the In¬ 
terstate Commerce Commission as su¬ 
preme in abating discriminations. It 
is claimed, however, by advocates of 


wider federal jurisdiction, that Con¬ 
gress has not acted but constitution¬ 
ally could act to bestow upon the 
Interstate Commerce Commission ex¬ 
plicit power to go beyond discrimina¬ 
tions and regulate state rates where 
one state was directly or indirectly 
depressing total revenue of an inter¬ 
state carrier and hence not paying, 
as among the states, its proper share 
of the cost of transportation. 

The suggestion, with which Inter¬ 
state Commerce Commissioner Meyer 
is identified, has for some time been 
urged that the federal and state au¬ 
thorities should cooperate. Some of 
Mr. Meyer’s colleagues are known to 
hold the view that where there is a 
dispute upon which the federal and 
state authorities cannot or do not 
agree, “cooperation” fails and one or 
the other of the authorities must have 
power to decide. The Commission in 
its 1918 report phrases its thought in 
this language: “Establishment of a 
relationship between federal and state 
authorities which will eliminate the 
twilight zone of jurisdiction and 
under which a harmonious rate 
structure and adequate service may 
be secured, state and interstate.” 

The jurisdiction proposal laid be¬ 
fore the Joint Committee of Congress 
by the railway executives was that 
federal regulation should extend to 
the whole instrumentality of inter¬ 
state commerce and any or all of its 
business that can have material effect 
upon interstate commerce. 


To Do Away with Wasteful Competition 


ii riUCH alterations of the law as will permit wasteful competition to he 
Aj avoided” is one modification which the President deems essential if 
non-governmental control is to he the policy. 


R ETENTION of advantages real¬ 
ized under the present govern¬ 
ment control is generally acclaimed. 

“Return of the railroads to their 
owners, ’ ’ asserted Representative 
Sims of Tennessee, “without legisla¬ 
tion allowing them to operate so as to 
confer the benefits government op¬ 


eration has conferred would be the 
strongest possible force operating for 
the creation of conditions that could 
be remedied only by the government 
taking over the railroads.” 

Senator Watson of Indiana said 
the roads should be “nationalized” 
under government control with pri- 


17 


vate ownership but operated by pool¬ 
ing as a unit under a common equip¬ 
ment zone plan. 

Representative Esch of Wisconsin 
thinks ‘'government operation has 
demonstrated the wisdom of open or 
common terminals in the large cen¬ 
ters, the free interchange of cars and 
engines, the short routing of freight 
so as to save time, the consolidation 
of offices, the control of issues of 
stocks and bonds and the payment of 
generous but not extravagant salaries 
to officials in charge of the manage¬ 
ment of transportation.” 

Terminal Consolidations 

npHE Reconstruction Congress of 
* War Service Committees favored 
“federal regulations permitting the 
elimination of wasteful competition, 
pooling of equipment, combination or 
consolidation through ownership or 
otherwise in the operation of termin¬ 
als, and such other practices as will 
tend to economies without destroying 
competition in service.” 

“The disjointed operation of the 
railroads,” said Otto H. Kahn, “each 
one considering merely its own sys¬ 
tem (and being under the law prac¬ 
tically prevented from doing other¬ 
wise) will, I am sure,, not be permit¬ 
ted again.” 

To the continuation of joint ticket 
offices Lewis J. Spence, Traffic Di¬ 
rector of the Southern Pacific, adds 
this: “Eliminate extravagant dupli¬ 
cation of passenger service and insure 
continuation of shipping cars loaded 
to maximum capacity.” 

The press generally agrees with the 
Cincinnati Enquirer that “it has been 
demonstrated conclusively that it was 
a fallacious principle of government 
to compel competitive conditions 
rather than cooperative,” and with 


the Indianapolis Star that “the Pres¬ 
ident is right in saying that we can¬ 
not return to the old order of re¬ 
pressive and destructive laws. ’ 5 

What Congress Could Do 

/^ONGRESS authorized and the 
^ President issued on Dec. 28 last, 
we are reminded by the New York 
World, “an order that the transpor¬ 
tation systems should remain subject 
to all statutes and findings of the In¬ 
terstate Commerce Commission and to 
all statutes of the states, but ‘ any or¬ 
ders, general or special, hereafter 
made by such director shall have par¬ 
amount authority and be obeyed as 
such.’ There was the point. That 
is what did the business . . . Con¬ 

gress can do in peace what the Pres¬ 
ident did in war, if it will, and al¬ 
most as expeditiously . . . By 

one act with fewer words than those 
used by the President in his procla¬ 
mation it can create a new and com¬ 
petent agency of control to supersede 
the stupid bureaus which have stag¬ 
nated, and nullify the mass of un¬ 
wise laws and regulations which all 
but wrecked the country a year ago. ’ ’ 

Construction of Equipment by Indi¬ 
vidual Roads 

XjO difficulty appears to be seen by 
^ the Interstate Commerce Com¬ 
mission in preserving the advantages 
of unification in certain forms while 
keeping construction of equipment on 
the list of functions which each of 
the several roads can perform inde¬ 
pendently. The Commission urges 
“the most efficient UTILIZATION of 
equipment,” but is careful to specify 
“provision for distributing the bur¬ 
den of FURNISHING equipment on 
an equitable basis among the respect¬ 
ive carriers.” 


18 


RAILWAY BUSINESS ASSOCIATION 

Committee on Railways After the War 


W. W. Salmon, Rochester, Chairman 
Pres. General Railway Signal Co. 


J. C. Bradley, Buffalo 
Pres. Pratt & Letchworth Co. 

E. J. Kearney, Milwaukee 
Sec. Kearney & Trecker Co. 

E. B. Leigh, Chicago 
Pres. Chicago Railway Equipment Co. 


Stephen C. Mason, Pittsburgh 
Sec. McConway & Torley Co. 

A. H. Mulliken, Chicago 
Pres. Pettibone, Mulliken Co. 

W. G. Pearce, New York 
Pres. American Brake Shoe and 
Foundry Co. 


H. H. Westinghouse, New York 
Chairman Westinghouse Air 
Brake Co. 


REQUESTS FOR COPIES 

of this pamphlet will be welcome from all 
those desiring to place it in the hands of 
their representatives or friends. Copies fur¬ 
nished or sent direct to lists upon applica¬ 
tion to Frank W. Noxon, Secretary Railway 
Business Association, 30 Church Street, New 
York. 


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